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Immediate Medicare Reforms Could Slash Nation's Debt

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Unread 10.25.11, 01:09 PM
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Immediate Medicare Reforms Could Slash Nation's Debt

On 10.25.11 09:59 AM posted by Bob Moffit

When it comes to the super-committee’s duty to reform Medicare, you’ll likely to hear the same tired and unsuccessful methods for lowering Medicare’s soaring costs: raising taxes, manipulating payment formulas, or making even deeper payment cuts to doctors and hospitals.

The best way to reform Medicare is transform it into a premium-support program, which provides a defined contribution to seniors’ chosen health plans, which include a variety of private plans as well as traditional Medicare fee-for-service. This approach — based on injecting consumer choice and competition into Medicare — has a long history of bipartisan support, going back to the early 1980s.

Congress could adopt this approach through a two-stage, ten-year structural reform, which the Heritage Foundation outlined in its long-term deficit plan, “Saving the American Dream.” When compared with the Congressional Budget Office’s baseline, Heritage’s two-stage Medicare reform plan would result in $9.4 trillion in savings by 2035.

During the*initial five-year transition period, Congress could make immediate changes to help secure the program’s fiscal solvency. Calculations from Heritage’s Center for Data Analysis show the initial reforms would result in nearly $299 billion in savings. These savings could eliminate shortfalls in the Hospital Insurance (HI) trust fund — which CBO estimates to go broke by 2020—and “fix” the Medicare physician payment formula, which threatens a 30 percent payment cut next year to doctors who see Medicare patients.

Read the rest of this column and find out what*Congress could do right now at National Review Online.

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